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Fentura Financial, Inc Announces 2015 Profits

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  • Net Income before tax and provision for loan losses for the year exceeded levels reported for 2014
  • Book value increased 14.8% over prior year to $12.90
  • Year over year share price appreciated 40.0%
  • Assets grew $51.5 million during the year
  • Loan growth exceeded expectations for the year, growing by $61.6 million

FENTON, Mich., Feb. 11, 2016 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX:FETM) reported pre-tax and pre-provision for loan losses net income for the three months ended December 31, 2015 of $1.6 million compared to pre-tax and pre-provision earnings of $1.5 million and $1.2 million reported for the third quarter of 2015 and the fourth quarter of 2014, respectively.  On an after-tax basis, quarterly earnings of $1.7 million for the fourth quarter of 2015 compared to $1.0 million and $1.1 million for the third quarter of 2015 and the fourth quarter of 2014, respectively.  For the year, Fentura reported pre-tax and pre-provision net income of $6.1 million compared to the $4.6 million reported for 2014.  On an after-tax basis, net income was $4.7 million in 2015 compared to $3.4 million in 2014.      

Ronald L. Justice, President and CEO said, "2015 operating performance represents another year of improved results for Fentura.  I am pleased with the strong improvement in earnings from core operations throughout the year.  Key to our continued success was the significant growth of both loans and deposits and the increase in net interest income from this growth.  We continued to experience solid residential mortgage loan originations, the majority of which were sold in the secondary market.  The gains on sale as well as the revenue from servicing these mortgages contributed positively to our bottom line.  We remain optimistic regarding our markets and the growth opportunity they offer." 

Balance Sheet

Total assets increased $10.7 million or 2.5% at December 31, 2015 compared to September 30, 2015, ending the year at $445.0 million.  Cash and due from banks decreased 40.3%, to $19.4 million at December 31, 2015 compared to the $32.5 million reported at September 30, 2015.  This decrease was primarily attributable to new loan funding.  Loan balances increased $23.4 million or 6.5% during the same period.  Loans increased from continued efforts to grow the Bank's client base. During the quarter, the Bank continued to experience growth in both its mortgage and commercial loan portfolios. Loans totaled $381.6 million at December 31, 2015.  Loans increased $61.6 million or 19.2% for the year ended December 31, 2015 when compared to December 31, 2014.  As noted previously, the increase in loans resulted from the Company's efforts to grow its loan portfolio with new and existing clients.            

Deposits totaled $376.0 million at December 31, 2015, an increase of $7.7 million or 2.1% compared to the $368.3 million reported at the end of the prior quarter.  Deposits increased $48.0 million or 14.7% for the year ended December 31, 2015 when compared to December 31, 2014.  The increase throughout the year occurred in non-interest bearing, interest bearing, and time deposits as the Company continued to grow its consumer, commercial and municipal client base.

Capital

Fentura Financial, Inc. and The State Bank continued to maintain capital in excess of levels considered well capitalized by regulatory agencies. The Bank's regulatory capital ratios are detailed in the table that follows, and indicate a strong Tier 1 Leverage Capital Ratio at December 31, 2015 and December 31, 2014.   The increase in the Tier 1 Leverage Ratio was primarily due to the increase in capital from operating results, while the modest decline in the risk-based capital ratios year over year is primarily due to changes in the treatment of certain items in the calculation of regulatory capital in 2015 along with the strong overall asset growth.

   December 31, December 31, Regulatory
  2015  2014 Well Capitalized
Tier 1 Leverage Capital Ratio  9.90% 9.83% 5.00%
Tier 1 Risk-Based Capital Ratio  11.00  11.80  8.00 
Total Risk-Based Capital Ratio  11.91  13.05  10.00 
          

Credit Quality

Throughout 2015, the Company continued to benefit from improvement in credit quality.   At December 31, 2015, loan delinquencies to total loans were 0.06% compared to 0.07% at December 31, 2014.  Substandard assets totaled $0.7 million at December 31, 2015, down from $3.2 million reported at December 31, 2014.  The low level of loan delinquencies and substandard assets eliminated the need for additional provisions to the allowance for loan losses throughout all of 2015 and in fact, contributed to a reversal of $1.0 million from the allowance for the year ended December 31, 2015.  Comparatively, for the year ended December 31, 2014 the Bank reversed $450 thousand from the allowance.

Net Interest Income

Net interest income of $3.9 million for the quarter ended December 31, 2015 improved compared to the $3.7 million and the $3.4 million reported in the third quarter of 2015 and the fourth quarter of 2014, respectively.  Interest income improved during the three months ended December 31, 2015, from interest on new loans added during the quarter and throughout the entire year.  Interest expense increased for the quarter ended December 31, 2015 compared to the quarters ended September 30, 2015 and December 31, 2014 because of interest expense on time deposits added during the quarter.   

On a year to date basis, net interest income at $14.5 million in 2015 compared favorably to the $12.9 million reported in 2014.  The year-over-year improvement is due to the increase in interest income from loan growth throughout the year. 

Noninterest Income

Noninterest income was $1.4 million for the quarter ended December 31, 2015 compared to $1.5 million for the third quarter of 2015 and $1.5 million for the fourth quarter of 2014.  The modest decline comparing the fourth quarter results to the prior quarter is attributable to the decline in Wealth Management income in the current quarter based on the level and timing of income from client investment transactions.  The primary variance comparing the current period to the same period in 2014 is the volume of mortgage loans sold in the secondary market and accordingly, the gain on sale and servicing rights from those loans.               

For the twelve months ended December 31, 2015, noninterest income totaled $6.6 million compared to $5.7 million reported for the prior year.  The increase in 2015 is primarily attributable to improved gain on sale and servicing rights from increased volume of mortgage loans sold in the secondary market with servicing rights maintained.     
  
Noninterest Expense

The Company recorded $3.7 million of noninterest expense in the quarter ended December 31, 2015, flat compared to the amount reported in the third quarter of 2015 and a decline from the $3.8 million reported in the fourth quarter of 2014.  The quarterly decrease of the current period compared to the same period in the prior year is primarily attributable to lower loan and collection expenses, as the level of substandard assets improved.  For the year, noninterest expense was $15.0 million in 2015 compared to $14.0 million reported during 2014.  The increase in noninterest expense in 2015 is primarily due to an increase in salary and benefits expense, which increased largely because of mortgage-related and other general employee compensation.   

Fentura Financial, Inc. is a bank holding company headquartered in Fenton, Michigan.  Its subsidiary bank, The State Bank, is also headquartered in Fenton with offices serving Fenton, Linden, Holly, Grand Blanc and Brighton. The Bank offers comprehensive financial services including commercial, consumer, mortgage, trust and financial planning services, and deposit products.  The Bank proudly provides services from its community offices in Genesee, Oakland and Livingston Counties and through on-line and mobile banking services.  More information about The State Bank is available at www.thestatebank.com

CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve risks and uncertainties.  Forward-looking statements include, but are not limited to, statements concerning future growth in earning assets and net income.  Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 


Fentura Financial Inc.     
 
 Dec-15Sep-15Jun-15Mar-15Dec-14
 UnauditedUnauditedUnauditedUnaudited 
Balance Sheet Highlights 
Cash and due from banks   19,425    32,517    27,003    32,947    19,522 
Investment securities   26,689    27,518    29,204    31,452    33,008 
Commercial loans   233,853    222,560    222,330    211,388    206,914 
Consumer loans   29,014    30,204    27,637    26,620    27,110 
Mortgage loans   118,693    105,353    93,825    89,302    85,945 
Gross loans   381,560    358,117    343,792    327,310    319,969 
ALLL   (3,505)   (4,439)   (4,333)   (4,453)   (4,406)
Other assets   20,872    20,655    20,155    26,394    25,489 
Total assets   445,041    434,368    415,821    413,650    393,582 
      
Non-interest deposits   108,102    104,131    110,930    99,390    91,738 
Interest bearing non-maturity deposits   181,703    182,865    157,860    162,719    154,499 
Time deposits   86,166    81,277    82,268    83,322    81,686 
Total deposits   375,971    368,273    351,058    345,431    327,923 
Borrowings   34,775    34,775    34,775    35,251    34,817 
Other liabilities   1,822    499    19    4,134    2,700 
Equity   32,473    30,821    29,969    28,834    28,142 
    445,041    434,368    415,821    413,650    393,582 
BALANCE SHEET RATIOS (unaudited) 
Gross Loans to Deposits 101.49% 97.24% 97.93% 94.75% 97.57%
Earning Assets to Total Assets 91.73% 88.78% 89.70% 86.73% 89.68%
Securities and Cash to Assets 10.36% 13.82% 13.52% 15.57% 13.35%
Deposits to Assets 84.48% 84.78% 84.43% 83.51% 83.32%
Loan Loss Reserve to Gross Loans 0.92% 1.24% 1.26% 1.36% 1.38%
Net Charge-Offs to Gross Loans -0.02% -0.01% 0.03% -0.01% -0.02%
Leverage Ratio - The State Bank 9.90% 9.42% 9.53% 9.39% 9.83%
Book Value per Share$  12.90 $  12.26 $  11.94 $  11.49 $  11.24 
 
Income Statement Highlights - QTDDec-15Sep-15Jun-15Mar-15Dec-14
 UnauditedUnauditedUnauditedUnaudited 
Interest income   4,481    4,232    4,005    3,933    3,951 
Interest expense   560    541    529    523    514 
Net interest income   3,921    3,691    3,476    3,410    3,437 
Provision for loan loss   (1,000)   -     -     -     (450)
Service charges on deposit accounts   203    202    207    194    232 
Gain on sale of mortgage loans   448    428    655    608    530 
Wealth management income   262    343    304    345    289 
Other non-interest income   533    495    886    461    443 
Total non-interest income   1,446    1,468    2,052    1,608    1,494 
Salaries and benefits   2,209    2,186    2,194    2,237    2,116 
Occupancy and equipment   568    557    554    583    552 
Loan and collection   97    124    154    190    267 
Other operating expenses   860    821    875    767    825 
Total non-interest expense   3,734    3,688    3,777    3,777    3,760 
Net Income before tax   2,633    1,471    1,751    1,241    1,621 
Income Taxes   889    501    595    422    559 
Net Income   1,744    970    1,156    819    1,062 
      
INCOME STATEMENT RATIOS/DATA (unaudited) 
Basic earnings per share$  0.69 $  0.39 $  0.46 $  0.33 $  0.43 
Pre-tax pre-provision earnings   1,633    1,471    1,751    1,241    1,171 
Net Charge offs   (66)   (33)   120    (47)   (74)
Return on Equity (ROE) 22.00% 8.81% 10.78% 11.40% 15.26%
Return on Assets (ROA) 1.62% 0.89% 1.10% 0.81% 1.10%
Efficiency Ratio 69.57% 71.49% 68.32% 75.27% 76.25%
Average Bank Prime 3.35% 3.25% 3.25% 3.25% 3.25%
Average Earning Asset Yield 4.53% 4.46% 4.42% 4.49% 4.60%
Average Cost of Funds 0.77% 0.75% 0.77% 0.77% 0.78%
Spread 3.76% 3.71% 3.65% 3.72% 3.83%
Net impact of free funds 0.21% 0.19% 0.19% 0.18% 0.18%
Net Interest Margin 3.97% 3.90% 3.84% 3.90% 4.01%
 
Income Statement Highlights - YTDDec-15Dec-14 Dec-14Dec-13
      
Interest income   16,652    14,655     14,655    12,481 
Interest expense   2,152    1,713     1,713    1,454 
Net interest income   14,500    12,942     12,942    11,027 
Provision for loan loss   (1,000)   (450)    (450)   7 
Service charges on deposit accounts   806    882     882    897 
Gain on sale of mortgage loans   2,140    1,339     1,339    1,613 
Wealth management income   1,255    1,228     1,228    996 
Other non-interest income   2,374    2,276     2,276    2,077 
Total non-interest income   6,575    5,725     5,725    5,583 
Salaries and benefits   8,826    7,906     7,906    6,925 
Occupancy and equipment   2,262    2,181     2,181    2,152 
Loan and collection   565    652     652    688 
Other operating expenses   3,324    3,289     3,289    3,471 
Total non-interest expenses   14,977    14,028     14,028    13,236 
Net Income before tax   7,098    5,089     5,089    3,367 
Income Taxes   2,407    1,728     1,728    (5,118)
Net Income from continuing operations   4,691    3,361     3,361    8,485 
      
INCOME STATEMENT RATIOS/DATA (unaudited)    
Basic earnings per share$  1.87 $  1.35  $  1.35 $  3.44 
Pre-tax pre-provision earnings   6,098    4,639     4,639    3,374 
Net Charge offs   (26)   43     43    68 
Return on Equity (ROE) 12.73% 13.03%  13.03% 46.78%
Return on Assets (ROA) 1.11% 0.94%  0.94% 2.71%
Efficiency Ratio 71.07% 75.15%  75.15% 79.69%
Average Bank Prime 3.35% 3.25%  3.25% 3.25%
Average Earning Asset Yield 4.48% 4.57%  4.57% 4.71%
Average Cost of Funds 0.77% 0.70%  0.70% 0.69%
Spread 3.71% 3.87%  3.87% 4.02%
Net impact of free funds 0.19% 0.17%  0.17% 0.15%
Net Interest Margin 3.90% 4.04%  4.04% 4.16%


Contact: Ronald L. Justice President & CEO Fentura Financial, Inc. (810) 714-3902

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